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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Mylan NV was -0.50. The lowest was -4.39. And the median was -2.47.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Mylan NV for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.923||+||0.528 * 1.0439||+||0.404 * 1.0679||+||0.892 * 1.2378||+||0.115 * 0.6683|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0485||+||4.679 * -0.0359||-||0.327 * 0.9103|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,587 Mil.|
Revenue was 2191.3 + 2490.7 + 2695.2 + 2371.7 = $9,749 Mil.
Gross Profit was 907 + 1062.6 + 1315.3 + 1008.1 = $4,293 Mil.
Total Current Assets was $6,628 Mil.
Total Assets was $22,644 Mil.
Property, Plant and Equipment(Net PPE) was $1,999 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,154 Mil.
Selling, General & Admin. Expense(SGA) was $2,247 Mil.
Total Current Liabilities was $3,959 Mil.
Long-Term Debt was $6,326 Mil.
Net Income was 13.9 + 194.6 + 428.6 + 167.8 = $805 Mil.
Non Operating Income was -16.3 + -134.7 + -50.9 + -2 = $-204 Mil.
Cash Flow from Operations was 80.5 + 652 + 974.8 + 114.7 = $1,822 Mil.
|Accounts Receivable was $2,265 Mil.
Revenue was 1871.7 + 2082.7 + 2084 + 1837.3 = $7,876 Mil.
Gross Profit was 830.1 + 969 + 1012.4 + 808.8 = $3,620 Mil.
Total Current Assets was $7,426 Mil.
Total Assets was $22,124 Mil.
Property, Plant and Equipment(Net PPE) was $1,872 Mil.
Depreciation, Depletion and Amortization(DDA) was $606 Mil.
Selling, General & Admin. Expense(SGA) was $1,731 Mil.
Total Current Liabilities was $5,288 Mil.
Long-Term Debt was $5,750 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2587.4 / 9748.9)||/||(2264.6 / 7875.7)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(3620.3 / 7875.7)||/||(4293 / 9748.9)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6627.6 + 1998.8) / 22644.1)||/||(1 - (7426.4 + 1872.3) / 22123.8)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(606.4 / (606.4 + 1872.3))||/||(1154.2 / (1154.2 + 1998.8))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(2246.8 / 9748.9)||/||(1731.2 / 7875.7)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((6325.7 + 3959.4) / 22644.1)||/||((5750.4 + 5288) / 22123.8)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(804.9 - -203.9||-||1822)||/||22644.1|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Mylan NV has a M-score of -2.47 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Mylan NV Annual Data
Mylan NV Quarterly Data